Question #25
Reading: Reading 42.1 Standards of Professional Conduct Guidance for Standards I
PDF File: Reading 42.1 Standards of Professional Conduct Guidance for Standards I.pdf
Page: 10
Status: Correct
Correct Answer: B
Question
Maria Valdes, CFA, is an analyst for Venture Investments in the country of Newamerica, which has laws prohibiting the acceptance of any gift from a vendor if the gift exceeds US $250. Valdes has evidence that her Venture Investments colleague, Ernesto Martinez, CFA, has been receiving gifts from vendors in excess of US $250. Valdes is obligated to:
Answer Choices:
A. disassociate herself from the activity, urge Venture to persuade Martinez to cease the activity, and inform CFA Institute and regulatory authorities of the violation
B. disassociate herself from the activity, and urge Venture to persuade Martinez to cease the activity
C. disassociate herself from the activity, urge Venture to persuade Martinez to cease the activity, and inform CFA Institute of the violation
Explanation
Standard I(A), Knowledge of the Law requires members who have knowledge of colleagues
engaging in illegal activities to disassociate from the activity and urge their firms to
persuade the individual to cease such activity. Reporting to regulatory authorities may be
prudent in certain circumstances, but is not required. Reporting to CFA Institute is not
required.
(Module 42.1, LOS 42: I(A))